Critical Manufacturing and Puerto Rico USA

Luis Fortuno and Congresswoman Jennifer Gonzalez

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The panelists :

 

 

 

The ULI Webinar has an incredible array of information crammed into 90 minutes and it gives a great snapshot for the many initiatives being introduced and planned to help the Puerto Rican economy and create more quality jobs. If I had to some it up in three words, Mo is back. Mo of course being momentum.

 Each of the speakers brought a different perspective. Congresswoman Gonzalez Colon noted her primary mission is the reconstruction of the Island and to shephard the many supporting bills recently introduced in the US Congress. Former Governor Luis Fortuno brought an informed Wash DC think tank perspective, Adam Greenfader is one of Puerto Rico´s most passionate advocates, Andy Carlson of JLL (Jones Lang LaSalle) brings experienced commercial  insights from the world´s second largest public brokerage firm, Dr Deusch stated his case for the reasons he brought his Swiss/German manufacturing business to Puerto Rico because of a need for precision and reliability, while Noel Zamot has a finger on the ethical pulse of developing new business in Puerto Rico.

The conversations were upbeat and positive. For instance, Congresswoman Colon made a presentation on MMEDS which was introduced last month to Congress under the bill H.R. 7527. This bill provides tax incentives and tax credits for companies creating manufacturing plants and jobs in economically distressed areas in the US and its territories. The criteria for distressed is even stricter than the recent Opportunity Zone legislation passed in late 2017. When the Congresswoman showed the MMEDS qualifying maps there were smaller areas in very non desirable locations in the US whereas Puerto Rico literally had a much larger proportional area in some desirable locations. And she stated very clearly that MMEDS is one of the very few legislative items that is drawing bi-partisan support from both sides of the aisle.

The entire panel then weighed in on the competitive advantages that Puerto Rico has when competing with the mainland U.S. including much lower labor costs by as much as 60% lower in some cases, an experienced manufacturing labor force going back 100 years, the University of Puerto Rico at Mayaguez which is a top 10% engineering school for the entire U.S. and which is very much geared to provide the engineering and chemistry talent to support Puerto Rico´s manufacturing base. That even today five of the top ten selling drugs internationally are produced in Puerto Rico and 12 of the top 20 pharmaceutical companies have plants in Puerto Rico. Luis Fortuno noted that Puerto Rico had more than $40 billion USD in pharmaceutical exports in 2019 but has the capacity to increase this substantially. The panel noted that some closed down plants are almost in turnkey conditions should manufacturers wish to return or expand capacity. It would not take much. Maybe a recession of the Jones Act, or at least an exemption for an extended period of time, might be the necessary catalyst. There are some interesting new developments on this front as was evidenced last week by Hawaii noting that 85% of their informed populace is all for rescinding the Jones Act as it costs that Island 1.2 billion USD in additional transportation and cost of goods fees.

Progress is being made on seeking some type of exemption under the taxing provisions of GILTI as it adds a 10%+ tax on profits for CFCs (controlled foreign corporations) which unfortunately applies to the US territories since the do not fall under the IRC (Internal Revenue Code). On May 1, 2020, Congresswoman Stacey E. Plasket, representing the US Virgin Islands, filed Bill HR 6648 – the Territorial Economic Recovery Act, that if becomes law, it will exclude our territories from much or all of the GILTI taxation, under certain provisions.

On April 3, 2020, Congresswoman Jennifer González, resident Commissioner for Puerto Rico, introduced Bill HR 6643, the Securing National Supply Chain Act of 2020, to provide various tax credits to Economically Distressed Zones, including a tax credit on the amount of wages paid by an employer to employees in such a zone. The proposal has some overlap with HR 7527 noted above.

President Trump’s Special Representative for Puerto Rico’s Disaster Recovery,  Rear Admiral Peter Brown, lead two delegations to Puerto Rico in August 2020, the last visit being last week. I am told the trip was very successful as a big priority was to visit and understand the many advantages of pharmaceutical manufacturing in Puerto Rico.  AG&T is committed to bringing our network top information and access to our industry’s leaders. 

 

Puerto Rico’s Manufacturing Renaissance: Strengthening America’s Supply Chain

Luis Fortuno

Puerto Rico's Manufacturing Renaissance: Strengthening America's Supply Chain

About Luis Fortuño

Luis G. Fortuño is the former Governor of Puerto Rico (2009–2013) and one of the island’s leading voices on economic development, manufacturing, and public policy. Prior to serving as governor, he was Puerto Rico’s Resident Commissioner in the U.S. Congress, where he advocated for the island’s economic and federal priorities. Today, he is a partner at Steptoe LLP, advising multinational corporations, investors, and governments on public policy, international trade, infrastructure, energy, and economic development.

Throughout his career, Governor Fortuño has been a strong advocate for strengthening Puerto Rico’s role as a strategic manufacturing hub for the United States. His deep understanding of government policy, international business, and economic competitiveness offers valuable insight into how Puerto Rico can leverage its world-class pharmaceutical industry, highly skilled workforce, and U.S. legal framework to support the reshoring of critical manufacturing and build a more resilient American supply chain.

 Luis Fortuño, partner at Steptoe and Johnson (Governor of Puerto Rico 2009-2013), 

 

 

The COVID-19 pandemic fundamentally changed the way governments and businesses think about global supply chains.

For decades, manufacturers optimized production by moving operations to lower-cost jurisdictions around the world. The pandemic exposed the vulnerabilities of that model. Shortages of pharmaceuticals, medical devices, personal protective equipment, semiconductors, and other critical products demonstrated that efficiency alone could no longer be the primary objective. Resilience had become equally important.

Today, reshoring and nearshoring have become central components of U.S. industrial policy.

One question remains especially relevant:

What role can Puerto Rico play in rebuilding America’s manufacturing capacity?

That question was the focus of a conversation between Luis Fortuño, former Governor of Puerto Rico (2009–2013) and Partner at Steptoe LLP, and Adam Greenfader, Chairman of AG&T. Their discussion explored Puerto Rico’s unique position within the United States and why the island remains one of America’s most important strategic manufacturing platforms.

A Manufacturing Legacy

Puerto Rico’s manufacturing story began long before COVID-19.

Beginning with Operation Bootstrap in the late 1940s, Puerto Rico became one of the United States’ premier manufacturing hubs. Over the following decades, the island attracted many of the world’s leading pharmaceutical, biotechnology, medical device, aerospace, and advanced manufacturing companies.

At its peak, Puerto Rico produced a significant share of the pharmaceuticals consumed in the United States and became home to one of the highest concentrations of pharmaceutical manufacturing facilities anywhere in the world.

That industrial base continues to represent one of Puerto Rico’s greatest competitive advantages.

Why Puerto Rico Still Matters

Governor Fortuño emphasized that Puerto Rico possesses several unique characteristics that are difficult to replicate elsewhere.

First, the island already has an extensive network of FDA-approved manufacturing facilities, many of which can be expanded or modernized far more quickly than constructing entirely new plants.

Second, Puerto Rico has a highly skilled workforce with decades of experience in highly regulated industries including pharmaceuticals, biotechnology, life sciences, aerospace, and medical devices.

Third, the island’s universities—particularly the University of Puerto Rico at Mayagüez (RUM)—continue to produce outstanding engineers, scientists, and technology professionals who support many of the world’s leading manufacturers.

Combined with Puerto Rico’s status as a U.S. jurisdiction, these assets create a compelling environment for advanced manufacturing.

Lessons from the Past

The conversation also examined the factors that contributed to Puerto Rico’s manufacturing decline.

The expiration of Section 936, increased global competition, the implementation of NAFTA, and aggressive incentive programs offered by countries such as Ireland, Singapore, and China all encouraged manufacturers to relocate production.

At the same time, Puerto Rico faced economic recession, rising energy costs, fiscal challenges, and the devastating impacts of Hurricanes Irma and Maria.

Despite these setbacks, the island retained one of its greatest strengths—its manufacturing ecosystem.

The Reshoring Opportunity

The pandemic fundamentally altered how companies evaluate supply chains.

Today, resilience, geographic diversification, national security, and supply chain reliability have become strategic priorities.

Puerto Rico is uniquely positioned to benefit from these trends.

As a U.S. territory operating under the American legal, regulatory, and intellectual property framework, Puerto Rico offers manufacturers many of the advantages of domestic production while maintaining strategic proximity to major U.S. markets.

Rather than rebuilding manufacturing capacity from the ground up, many companies have the opportunity to leverage an existing industrial base supported by experienced workers, established infrastructure, and decades of operational expertise.

Policy and Investment

The discussion also addressed the importance of public policy in supporting Puerto Rico’s manufacturing future.

At the time, bipartisan legislation introduced by Resident Commissioner Jenniffer González-Colón, together with members of Congress, sought to strengthen America’s critical supply chains while recognizing Puerto Rico’s strategic role in national manufacturing.

Although specific legislation has evolved over time, the broader objective remains unchanged: strengthening domestic manufacturing capacity while reducing dependence on distant supply chains for essential products.

Looking Back

Viewed today, many of the observations made during this conversation proved remarkably accurate.

Reshoring has become a central objective of U.S. industrial policy.

Supply chain resilience now influences corporate site selection decisions.

Federal investment in advanced manufacturing has accelerated, and Puerto Rico continues to attract new interest from pharmaceutical, life sciences, medical technology, and advanced manufacturing companies seeking to expand production within the United States.

The conversation serves as an important reminder that Puerto Rico’s manufacturing potential did not begin with COVID-19—it simply became impossible to ignore.

AG&T’s Perspective

For more than three decades, AG&T has worked at the intersection of economic development, real estate, infrastructure, hospitality, and industrial investment throughout Puerto Rico and the Caribbean.

Our conversations with policymakers, industry leaders, investors, and manufacturers have consistently reinforced one conclusion: Puerto Rico’s future will be built upon a diversified economy. Puerto Rico is uniquely positioned not only to participate in America’s manufacturing renaissance, but to help lead it.

From the Netherlands to the Caribbean: Rethinking Climate Resilience for Island Communities

ULI Roundtable on Climate Resilience in The Netherlands

From the Netherlands to the Caribbean: Rethinking Climate Resilience for Island Communities

 

Climate resilience is no longer simply an environmental discussion.

It has become one of the defining economic and development challenges of the 21st century. For island nations throughout the Caribbean, climate adaptation influences everything from infrastructure investment and insurance costs to tourism, housing, transportation, energy, and long-term economic competitiveness.

Recognizing these challenges, Adam Greenfader with the Urban Land Institute (ULI) convened an international Climate Resilience Roundtable in the Netherlands, bringing together planners, architects, engineers, financial institutions, developers, investors, and public-sector leaders to explore how some of the world’s most climate-resilient communities can help shape the future of Caribbean development.

The discussion was particularly timely following the devastating impacts of Hurricanes Irma and Maria in 2017 and Hurricane Dorian in the Bahamas in 2019. These events highlighted the urgent need to move beyond disaster recovery and begin designing communities capable of withstanding the increasing impacts of climate change.

Learning from the Dutch

Few countries understand the relationship between water and urban development better than the Netherlands.

For more than a thousand years, the Dutch have designed cities, infrastructure, and landscapes that coexist with water rather than simply attempting to control it. Their expertise in flood management, adaptive urban planning, coastal engineering, and integrated water systems has become a global model for climate resilience.

Rather than viewing resilience as an additional cost, the Dutch approach recognizes it as a long-term investment—one that protects communities, reduces future losses, and creates stronger, more valuable places to live and invest.

As Caribbean nations confront rising sea levels, stronger storms, coastal erosion, and aging infrastructure, these lessons have become increasingly relevant.

Sharing Caribbean Experience

Representing the Caribbean perspective, Adam Greenfader, then Chair of the ULI Southeast Florida/Caribbean Council and Chairman of AG&T, shared lessons learned from the ULI Advisory Services Panel for the Municipality of Toa Baja, Puerto Rico.

The multidisciplinary panel examined how one of Puerto Rico’s most vulnerable municipalities could rebuild after Hurricane Maria while improving long-term resilience, strengthening economic opportunity, and reducing future climate risks.

Rather than focusing solely on reconstruction, the discussion emphasized creating communities that are stronger than those that existed before the storm.

This philosophy—often described as “building back better”—has since become a guiding principle for resilient development worldwide.

A Global Perspective

Joining the discussion was Henk Ovink, the Netherlands’ Special Envoy for International Water Affairs and one of the world’s foremost experts on climate adaptation and water management. Mr. Ovink discussed how climate resilience requires integrated thinking across government, infrastructure, finance, urban planning, and community engagement.

His work through initiatives such as Rebuild by Design, the Global Center on Adaptation, and Water as Leverage has demonstrated that resilience is most successful when architects, engineers, investors, policymakers, scientists, and local communities collaborate from the earliest stages of planning.

The message was clear:  Resilience cannot be added at the end of a project.

It must become part of the project’s DNA.

 

From Recovery to Regeneration

One of the most important themes of the roundtable was the distinction between recovery and regeneration.

Recovery seeks to restore what existed before.

Regeneration asks a more ambitious question:

How can we rebuild communities that are stronger, safer, more sustainable, and better prepared for future generations?

That philosophy extends far beyond engineering.

It includes resilient housing, renewable energy, modern infrastructure, nature-based solutions, flood management, resilient tourism, environmental restoration, and economic diversification.

Increasingly, these principles are also influencing investment decisions.

Why This Matters Today

Since this discussion took place, climate resilience has become one of the most important considerations in global real estate and infrastructure investment.

Institutional investors now routinely evaluate climate risk alongside traditional financial metrics.

Insurance markets increasingly reward resilient design.

Hotels, resorts, airports, ports, hospitals, and mixed-use developments are incorporating resilience into their planning from the earliest stages.

For the Caribbean, resilience is no longer simply about protecting communities.

It has become a competitive advantage.

Destinations that invest in resilient infrastructure, sustainable development, renewable energy, and climate adaptation will be better positioned to attract tourism, institutional capital, and long-term economic growth.

AG&T’s Perspective

For more than three decades, AG&T has viewed resilience as an essential component of responsible development throughout the Caribbean.

Whether advising hospitality projects, master-planned communities, infrastructure initiatives, or economic development strategies, we believe resilience should not be treated as a regulatory requirement or a marketing slogan.

It is an investment strategy. Projects that are thoughtfully designed to withstand climate risk, reduce operating costs, protect natural systems, and enhance community well-being create stronger long-term value for investors, residents, and governments alike.

The conversations held in the Netherlands reinforced an important principle that continues to guide our work today: The Caribbean has the opportunity not simply to recover from climate change—but to become a global leader in resilient, regenerative development.

By combining local knowledge with international best practices, we can create island communities that are stronger, more sustainable, and more prosperous for generations to come.

 

      Some of the works discussed:

The Future of Caribbean Tourism: A Conversation That Helped Shape the Next Decade

The Future of Caribbean Tourism: A Conversation That Helped Shape the Next Decade

As part of the Puerto Rico Builders Association’s Annual Convention, AG&T Chairman Adam Greenfader moderated a distinguished panel of leaders from government, global hospitality, development, alternative accommodations, and investment to discuss the future of tourism in Puerto Rico and the Caribbean.

The conversation brought together Carla Campos (Puerto Rico Tourism Company), Pablo Maturana (Hilton), Rachel DeLevis (Airbnb), Federico Stubbe (PRISA Group), Federico Sánchez (Grupo Interlink), and Eric Berman (Lifeafar) to explore how Puerto Rico could strengthen its position as one of the Caribbean’s leading tourism and investment destinations. Topics included evolving traveler preferences, hotel development, branded hospitality, airlift, alternative accommodations, public-private collaboration, and the critical role tourism plays in driving long-term economic growth.

 

 

Looking Beyond Traditional Tourism

One of the central themes of the discussion was the recognition that tourism was becoming far more than a leisure industry.

Hospitality had evolved into one of Puerto Rico’s most important economic development strategies—supporting construction, infrastructure, transportation, retail, food and beverage, entertainment, healthcare, and entrepreneurship throughout the island.

The conversation emphasized that future competitiveness would depend upon creating differentiated experiences rather than simply increasing hotel inventory.

New Trends Reshaping Hospitality

The panel examined several emerging trends that have since transformed the industry.

Global hotel brands were expanding their presence throughout the Caribbean.

Alternative accommodation platforms such as Airbnb were changing how visitors experienced destinations.

Developers were increasingly focusing on mixed-use communities, branded residences, wellness, experiential travel, and lifestyle-driven hospitality.

The discussion also highlighted the growing importance of airlift, destination marketing, public-private collaboration, and investment in supporting infrastructure—all factors that continue to shape Puerto Rico’s tourism economy today.

Looking Back

In many respects, the themes discussed during this panel proved remarkably prescient.

Since then, Puerto Rico has experienced record tourism performance, expanded international air service, significant new hotel investment, the growth of luxury hospitality, and increased private-sector participation across the tourism ecosystem.

Hospitality has become one of the island’s principal economic drivers, supporting thousands of jobs while attracting billions of dollars in private investment.

AG&T’s Perspective

For more than three decades, AG&T has been committed to advancing conversations that shape the future of Caribbean hospitality.

Whether through the Puerto Rico Builders Association, the Urban Land Institute, CHICOS, Discover Puerto Rico, Bisnow, or numerous investment forums throughout the Caribbean, our objective has remained consistent: bringing together government leaders, developers, investors, hotel brands, financial institutions, and entrepreneurs to explore the ideas that will define the region’s next generation of growth.

Tourism is no longer simply about attracting visitors.

It is about creating resilient destinations, vibrant communities, sustainable economic development, and long-term investment opportunities.

Puerto Rico has demonstrated that when the public and private sectors work together, hospitality can become far more than an industry—it can become a catalyst for economic transformation.

As Puerto Rico continues to strengthen its position within the global tourism marketplace, the conversations that began years ago remain just as relevant today. The difference is that many of the ideas discussed have now become reality.

Puerto Rico Takes a Big Bite of the Big Apple

October 1, 2019, New York City– The Puerto Rico Builders Association takes a  big bite of the Big Apple at the 2019 Bisnow National Real Estate Finance Summit. The National Real Estate Finance Summit is one of the most esteemed, high-level, and best attended event in the nation. This year was no exception with over 300 attendees from finance, capital markets, financial advisory, private equity, and real estate.

The Puerto Rico panel included Ing. Emilio Colón Zavala,  President of the Puerto Rico Builders Association/ ECZ Group,  Eric Berman,  Chief Investment Officer at Lifeafar, Jorge Ruiz-Montilla, Capital Member and Chairman of the Real Estate & Finance Practice Group at MCconnell Valdes, Philip Carroll,  Director of Finance at Royal Palm Companies and Adam Greenfader, Managing Partner of AG&T.

Ethan Penner, best known  for creating the CMBS  market, key noted the event with insight on “high conviction investment themes.”  The Puerto Rico panel drew much interest at the Finance Summit. “We were impressed to hear from the leaders of the financial markets in New York that they see Puerto Rico as a great opportunity,  explained Emilio Colón Zavala. With less than 7% tourism GDP, there is room for 15,000 more hotel keys.’

Philip Carroll of Royal Palm Companies , concurred with the assessment of hospitality demand and explained some of the island’s competitive advantages in Puerto Rico including the ability to leverage Tourism Tax credits with Opportunity Zone incentives. Royal Palm is currently developing a 1,000 key hotel and marina resort on the island.  

 

Pictured Left to Right: Adam Greenfader, Emilio Colon Zavala, Philip Caroll, Marcial Diaz

 

The panel received multiple questions throughout the presentation.  Of particular interest, was the level of detail and financial sophistication about Act 20/22. Jorge Ruiz-Montilla explained some of the benefits of the laws and highlighted the island’s economic and political stability.

When asked, “Why now, why invest in Puerto Rico today”, the consensus of the group was clear…the numbers speak for themselves. “Puerto Rico  posted positive economic growth in 2019 and is forecasting a 2.5% GDP for 2020. We clearly hit bottom and with Billions of CDBG-DR money coming to the island in the next few years,  the time is now”, quoted Adam Greenfader, who moderated the Panel.

Lifeafar, a real estate investment and hospitality firm, recently expanded their operations from Medellin, Colombia to Puerto Rico.  “Puerto Rico is a place you can make a real change. Our investors want to make a good return on investment but also know they are helping to make a difference”, quoted Eric Berman.  

For more information about Puerto Rico,. You can join the Puerto Rico Builders Association on October 29-30 at their annual conference. See link attached. https://www.constructorespr.com/convencion/#eventbrite

 

About The Puerto Rico Builders Association

The Puerto Rico Builders Association is a non-profit organization established in 1951. The PRBA is the local chapter for the National Association of Home Builders (NAHB) and the Urban Land Institute (ULI). We proudly represent the leaders in housing, commercial and industrial and tourism sectors. We also represent investors and professionals related to the Puerto Rico’s real estate development and the construction industries. Our main objective is to promote and lead planned development, that is safe and sustainable, as to serve as an a principal productive economic driver motor for our island, in collaboration with the private and public sectors in Puerto Rico.

About AG&T

AG&T is a real estate development and consulting company founded in 1998 with headquarters in Miami, Florida. Our  track record spans over 55 real estate development projects in Puerto Rico, Sint Maarten, Costa Rica, Panama, Mexico, Dominican Republic, and various other Caribbean islands.

 

 

Caribbean Hospitality Summit Draws Record Numbers

The Caribbean’s Hospitality Renaissance:

 

For decades, the Caribbean has been recognized as one of the world’s premier tourism destinations. Today, it is emerging as one of the most compelling regions for hospitality investment, infrastructure development, and long-term capital deployment. At the center of that transformation is Puerto Rico—a market whose financial renaissance is helping redefine investment across the Caribbean.

At AG&T, we have had the privilege of participating in that evolution for more than three decades.

As a Caribbean real estate development and capital advisory firm, our mission extends well beyond individual transactions. We have worked to strengthen the economic ties between Puerto Rico, the U.S. mainland, and the broader Caribbean by bringing together developers, lenders, institutional investors, hospitality brands, family offices, government agencies, and industry leaders. We believe that successful hospitality markets are built on relationships, collaboration, and confidence in long-term investment.

This philosophy has guided AG&T’s partnerships with organizations such as the Puerto Rico Builders Association, the Urban Land Institute, Bisnow, hospitality conferences, investment forums, and numerous public and private initiatives designed to showcase the Caribbean as a world-class destination for investment as well as tourism.

One such milestone was the Puerto Rico Builders Association’s conference, where AG&T organized and moderated a discussion on the future of development finance featuring senior executives from FirstBank, the Economic Development Bank of Puerto Rico, and Acrecent Financial. While the conversation centered on financing new construction, it reflected something much larger: Puerto Rico’s financial sector was entering a new era, creating opportunities not only for the island, but for hospitality and real estate investment throughout the Caribbean.

Looking back today, that conversation marked the beginning of a broader transformation.

Puerto Rico has emerged from years of fiscal restructuring with renewed financial stability, strengthened institutions, and a growing ecosystem of capital providers. Traditional banks have returned to construction lending, private credit has expanded, institutional investors are increasingly active, and billions of dollars in federal investment have accelerated infrastructure modernization. Together, these developments have created one of the strongest investment environments the island has experienced in decades.

The implications extend far beyond Puerto Rico.

Hospitality has always been one of the Caribbean’s most important economic engines. Across the region, demand for luxury resorts, branded residences, mixed-use destinations, marinas, wellness communities, and experiential travel continues to grow. Meeting that demand requires sophisticated capital markets, experienced development partners, and trusted financial institutions.

Puerto Rico’s financial resurgence is helping create that foundation.

As capital markets mature and investor confidence grows, the island increasingly serves as a gateway for institutional investment into the Caribbean. International hotel brands, private equity firms, family offices, lenders, and developers are viewing the region with renewed optimism, supported by stronger financial structures and improved access to capital.

At AG&T, we have worked to help build those connections.

Through partnerships with organizations such as Bisnow, the Urban Land Institute, the Puerto Rico Builders Association, and numerous hospitality and investment organizations, we have organized conferences, investor forums, educational programs, and networking events that connect mainland U.S. capital with Caribbean opportunities. These initiatives are designed not simply to promote projects, but to foster meaningful dialogue between investors, public officials, hospitality leaders, financial institutions, and developers.

Our objective has remained remarkably consistent: position Puerto Rico and the Caribbean as globally competitive destinations for investment, innovation, and sustainable economic growth.

The Caribbean hospitality sector is entering a defining period. Record tourism, expanding airlift, increasing demand for luxury accommodations, resilient infrastructure, and growing interest from global investors are reshaping the region’s development landscape. At the same time, public-private partnerships, innovative financing structures, and collaborative leadership are creating opportunities that would have been difficult to imagine only a decade ago.

Economic transformation does not occur in isolation. It is the product of sustained collaboration among governments, financial institutions, developers, investors, and industry organizations that share a common vision.

Puerto Rico’s financial renaissance is strengthening not only the island’s economy, but also the future of Caribbean hospitality.

At AG&T, we are proud to continue serving as a bridge between Caribbean opportunity and global capital—helping build the relationships that will shape the region’s next generation of hospitality and real estate development.

Puerto Rico Ready for Development

Ponce Paradise

A Beachfront Acre For $30K In An OZ? Welcome To Puerto Rico

Published by Deidra Funcheon, Bisnow Miami

Puerto Rico was already struggling from decades of fiscal mismanagement and had just declared bankruptcy over its $123B debt when it was hit by two hurricanes in September 2017 — only to run into a botched disaster response. The way some see it, though, rock bottom is behind Puerto Rico, and the island is in the early stages of an upswing. “Puerto Rico is setting an incredible pace for economic recovery,” said Brad Dean, CEO of Discover Puerto Rico, a destination marketing organization that promotes the commonwealth. “Airport arrivals are exceeding pre-Hurricane Maria levels, as are lodging revenues. Given the quick rebound, reinvestment in hotel product and tremendous potential for the island’s tourism industry, this is Puerto Rico’s time. From an investor’s perspective, there’s never been a better time to invest in the island’s tourism industry.”

Buildings and infrastructure are still being repaired and upgraded, and the government has instituted a full slate of tax incentives to lure investors, said AG&T Managing Partner Adam Greenfader, who advises clients from his base in Miami. “You can still acquire assets for 50 cents on the dollar,” he said. “Beachfront land in Puerto Rico today can still be acquired at $30K an acre.” Dean and Greenfader will be panelists at Bisnow’s Caribbean Hospitality & Tourism Summit Aug. 1. Puerto Rico’s economic spiral goes back decades. After World War II, it gave big tax breaks to manufacturers, and to cover for revenue shortfalls, issued more bonds than it could repay. In turn, it implemented austerity measures that did little except drive the population away. Its problems were exacerbated by that fact that it has no voting power in Congress.

Greenfader outlined some key developments toward a turnaround. Puerto Rico’s cash-strapped government has tried to lure investors with laws like Acts 20 and 22, passed in 2012 and designed so that people who move to the island pay little or no federal income tax, even on passive investments. Greenfader said this has attracted 250 to 500 families per year, including big names such as billionaire John Paulson.  Other incentives include one that lets people with tourism-related projects get back 40% or 50% of their acquisition costs.  

 

Development Land
80 Acres in Naguabo, Puerto Rico

 

Puerto Rico’s massive government debt is currently being sorted out by a federal oversight board. “The major bonds, COFINA and GO, have been renegotiated and the bondholders have been put into payment plans,” Greenfader said.  Since the 2017 hurricanes, federal disaster aid — including $1.4B authorized in June — has trickled in. Hotels damaged in the storms were forced to remodel or rebuild and are now offering better products at higher rates. Many are incorporating solar and microgrids to be resilient for the future. The storms raised the profile of Puerto Rico — one study found that prior to them hitting, about half of Americans hadn’t known the commonwealth was part of the U.S. Airport arrivals and tourism revenue have already set records this year. On top of this, Puerto Rico is the beneficiary of community development block grant funding, and 97% of the entire commonwealth — much of it beachfront — has been designated a qualified opportunity zone. “Puerto Rico never had a 1031 exchange, so from a tax perspective, it’s the first time it’s getting capital gains money,” Greenfader said.  

Lifeafar Investments Chief Financial Officer Cole Shephard, who will also be a panelist at the Bisnow event, said his Colombia-based company is already taking advantage of Puerto Rico’s investment climate, raising $16M in an opportunity fund to reposition a 61-room hotel. Shephard said Lifeafar, which started by offering real estate services to expats in Medellín, was drawn by the tax incentives and that the opportunity zone designation was a bonus. He is now doing due diligence on additional properties. “I see the sophisticated money chasing metro San Juan,” he said, suggesting that there is a lot of opportunity for small to mid-market projects outside of the city. Not everything in Puerto Rico is rosy. 

Development Land
29 Acres in Isabella, Puerto Rico

 

As the government has scrambled to generate revenue, sales tax was raised to 11.5%, pensions have been cut, college tuition increased and some 300 public schools closed. Critics have complained that wealthy investors have been protected while ordinary Puerto Ricans suffer. “The locals have had to carry the brunt of these austerity measures,” Greenfader acknowledged. “I’d understand completely, if I see a guy who’s a hedge fund manager with $500M earnings pay hardly any taxes, versus the regular guy paying 35% taxes who’s a salaried worker at Bacardi,” Shepherd said. But Shepherd added that conversations with Puerto Rican officials convinced him they have carefully calculated the tradeoff and found that luring private investment now will help island residents long-term, even though it may take years for the effects to be obvious.

Greenfader suggested that boosting tourism is a winning solution for both investors and residents. Because Puerto Rico since the Kennedy era has been focused on manufacturing, its tourism industry was relatively neglected. The industry now accounts for less than 7% of Puerto Rico’s gross domestic product. In other Caribbean islands, that number is typically between 30% and 80%. Dean’s destination marketing organization, Discover Puerto Rico, was established last year to actively promote tourism. Bisnow’s Aug. 1 Caribbean Hospitality & Tourism Summit will also include Puerto Rico Tourism Co. Executive Director Carla Campos, Hilton VP for Development Juan Corvinos Solans, Puerto Rico Builders Association President Ing. Emilio Colón Zavala and more. 

Event Ended On: Thursday August 1 2019

Puerto Rico’s Turning Point: Looking Beyond the Crisis

In 2018, less than a year after Hurricanes Irma and Maria devastated Puerto Rico, the headlines focused almost exclusively on destruction, migration, and uncertainty.

At AG&T, we saw something different. While acknowledging the immense humanitarian and economic challenges facing the island, we believed Puerto Rico was entering a period of profound transformation. The combination of federal reconstruction funding, economic reform, tax incentives, private investment, and long-overdue infrastructure modernization created the foundation for what could become one of the island’s most significant economic renaissances in decades.

That perspective was featured in an interview with Bisnow South Florida, where Adam Greenfader discussed Puerto Rico’s long-term outlook, the rebuilding process, and why the island’s greatest opportunities still lay ahead.

Several of the themes discussed in the interview have proven remarkably accurate. Puerto Rico experienced one of the largest reconstruction efforts in modern U.S. history, supported by tens of billions of dollars in federal investment for housing, infrastructure, utilities, schools, healthcare facilities, and resilience projects.

  • Tourism reached record levels.
  • Luxury hospitality investment accelerated.
  • New residents, entrepreneurs, family offices, technology companies, and investment funds relocated to the island, strengthening sectors ranging from real estate and finance to life sciences and technology.

The discussion also anticipated the growing importance of Puerto Rico’s tax incentive programs, Opportunity Zones, and the island’s role as a gateway between the United States, Latin America, and the Caribbean.

At the same time, many of the challenges identified remain part of Puerto Rico’s ongoing conversation, including housing affordability, infrastructure modernization, energy resilience, insurance costs, population dynamics, and creating economic growth that benefits all Puerto Ricans.

AG&T’s Perspective

For more than three decades, AG&T has believed that Puerto Rico’s future extends far beyond disaster recovery. The island possesses exceptional long-term advantages, including its strategic location, U.S. legal and financial framework, highly educated bilingual workforce, manufacturing base, expanding hospitality sector, and unique tax and investment incentives.

Our work has consistently focused on helping connect these strengths with responsible private investment while promoting resilient, sustainable, and inclusive economic development.

The interview below captures an important moment in Puerto Rico’s history when rebuilding was just beginning and the island’s future remained uncertain.

Looking back today, it serves as a reminder that meaningful transformation often begins long before the results become visible.

The following article originally appeared in Bisnow South Florida and is reproduced here with permission/summary for historical context.

Puerto Rico After The Hurricanes: Investors And Bitcoin Cowboys Are Circling

By Deirdra Funcheon as Published in Bisnow South Florida

Puerto Rico has been desperate for aid that has been too slow and insufficient following hurricanes Irma and Maria in 2017. But a few on the island say the attention followed might ultimately be a net positive for the commonwealth. “The bottom line is that Puerto Rico in the next two to three years is expected to see strong growth — 3 to 3.5% of GDP,” said Adam Greenfader, principal of Miami-based AG&T Development and Advisory Services. “It hasn’t had growth in 12 years. A depression is defined as negative economic growth for three quarters, so for all intents and purposes, Puerto Rico has been in a depression for 12 years.”

Greenfader married into a family that facilitates Section 8 housing throughout Puerto Rico. He then became a developer there himself. Currently, he serves as the liaison to the Puerto Rico Builders’ Association and the chair of the Urban Land Institute’s Caribbean Council. Greenfader points out that while last summer’s hurricanes devastated the commonwealth, jobs had already been scarce for more than a decade as the government faced a crippling debt crisis, owing $123B and declaring bankruptcy last spring. Though an estimated 150,000 Puerto Ricans fled to the U.S. mainland after the hurricanes, between 60,000 and 70,000 residents had already been leaving each year of the crisis. Puerto Rico’s current population is about 3.5 million, down from a peak of about 4 million, Greenfader said.

Turnaround efforts began years ago. Reforms enacted in 2012 enticed businesses and high net worth individuals to relocate to Puerto Rico by taxing corporate profits at a flat 4% and eliminating taxes on dividends, interest and capital gains for anyone who resided at least half the year in Puerto Rico. For anyone selling a company or large amounts of stock, these measures could result in saving millions of dollars on taxes. Famously, Putnam Bridge Funding CEO Nicholas Prouty invested more than $100M and relocated his family. Billionaire John Paulson bought several hotels. Michael E. Tennenbaum founded Caribbean Capital & Consultancy Corp. Goldman Sachs and various hedge funds moved in and bought distressed mortgages for pennies on the dollar. 

Greenfader said that about 1000 high net worth individuals moved to the island, and about 200 are coming each year. Cottage industries sprung up to cater to these ultra-wealthy.  Then last year’s hurricanes blew through, knocking out power and killing 64 people directly and 4,645 in total, according to Harvard University. Though the U.S. government responded painfully slowly, $18B in aid has been approved from the Department of Housing and Urban Development, and billions more are expected, Greenfader said.

Recovery is slow, but happening. Tesla built a solar array to power a children’s hospital. Doctors are being offered tax incentives to stay in Puerto Rico. Private insurance companies have started to pay claims, so 60% of hotels are now operational, Greenfader said. He believes that when the economy improves, exiles will move back. 

Publicity around the hurricanes certainly brought attention to the commonwealth. Immediately after the hurricanes, only about half of Americans knew that Puerto Rico was part of the United States; that number has since risen to 76%. Following the disaster, dozens of cryptocurrency entrepreneurs relocated to San Juan to buy hundreds of thousands of acres of land, take advantage of the tax structure and set up a “crypto utopia.” Greenfader suggested there is more opportunity for economic recovery: Puerto Rico’s tourism industry makes up only 6.5% of gross domestic product, whereas on many Caribbean islands, that figure is 50% or more. That is by design, he said; in the 1950s and ’60s, laws were structured to keep out the Mafiosos who ran Cuba. It could be increased substantially. 

Furthermore, the island has long had a mishmash system of collecting property taxes, partly because so many homes are built informally or illegally — “People get a paycheck, buy [a] few beers, invite their friends and family over to build a wall at a time,” Greenfader said — and partly because the tax code hasn’t been revised since 1950s. “A property worth a million dollars might pay no more than $2K, $3K in taxes for a year,” Greenfader said. A better system of collecting taxes could be implemented to make the government more solvent.  Although he is optimistic, Greenfader acknowledged the challenges.

While Puerto Rico is a diverse society, where rich and poor have long mixed freely, the influx of people taking advantage of the tax breaks is “adding an upper class the island never had before,” he said, and there has been some blowback. Workaday employees are facing pension cuts and austerity measures as Puerto Rico grapples with its debt. Currently, according to Democracy Now, 55,000 residents are in foreclosure and the government is turning to privatization as the solution for economic woes, which will enrich investors but hurt the working class. In a Bloomberg article Monday about the search for someone to buy the country’s beleaguered electric company, which goes so far as to ask potential buyers how they would like to be regulated, a Puerto Rico resident said, “We are tired of people coming here to get rich and take advantage of us.”  Some grass-roots organizations have taken shape to resist Wall Street — forces that author Naomi Klein explores in a new book, “The Battle for Paradise: Puerto Rico Takes On the Disaster Capitalists.”

Greenfader noted that insurance premiums will likely continue to rise, and the Jones Act, a shipping law that requires goods to stop in a mainland port, makes commodities expensive. Whatever economic policies prevail, at least new construction on the island should be more resilient. Greenfader said builders already adhere to codes that mirror Miami-Dade’s, which were made stronger after Hurricane Andrew in 1992. They use reinforced concrete and no wood. Going forward, he said, there is a commitment to using more sustainable designs, particularly in the energy space, such as solar power arrays and micro electric grids. Today, about 10,000 customers in Puerto Rico who lost electricity after last year’s hurricanes are still without power. 

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Thirty Years of Connecting Capital and Opportunity

Thirty Years of Connecting Capital and Opportunity

For more than three decades, AG&T has believed that successful economic development begins by bringing the right people together.

Throughout our history, we have worked closely with government agencies, economic development organizations, institutional investors, developers, hospitality companies, financial institutions, and industry associations to strengthen Puerto Rico’s relationships with the U.S. mainland and the international investment community.

One example of that commitment was the Caribbean & Latin America Investment Summit, organized in collaboration with the Puerto Rico Builders Association and the administration of Governor Ricardo Rosselló. The summit welcomed more than 200 investors, developers, family offices, institutional capital groups, and public-sector leaders to San Juan to explore Puerto Rico’s growing opportunities in hospitality, infrastructure, mixed-use development, manufacturing, and economic development.

The event attracted significant national and international attention while reinforcing Puerto Rico’s position as one of the Caribbean’s most compelling destinations for investment under the U.S. flag.

Building on that momentum, AG&T continued its efforts to connect Puerto Rico with institutional capital by partnering with Bisnow, one of the world’s leading commercial real estate media and event platforms, to organize the Caribbean Hospitality Investment Summit in Miami.

The objective was not simply to host another conference.

It was to create a meaningful dialogue between the public and private sectors, bringing together government officials, hotel brands, developers, lenders, institutional investors, and industry leaders to discuss the future of Caribbean hospitality and tourism.

The distinguished speaker lineup reflected the caliber of those conversations and included leaders from Hilton, Apple Leisure Group, Kimpton Hotels, Dream Hotel Group, the Inter-American Development Bank, Trust Hospitality, McConnell Valdés, Sion Capital, and the Puerto Rico Builders Association. Together, they examined topics including hospitality investment, resort development, tourism growth, resiliency, recovery strategies, and the evolving capital markets supporting Caribbean development.

These discussions helped reinforce a broader message that continues to guide AG&T today:

Puerto Rico’s future depends upon strong collaboration between the public and private sectors.

Government creates the policy framework. Private enterprise provides innovation, investment, and execution. Together, they create the conditions necessary for sustainable economic growth.

Over the years, AG&T has continued to cultivate trusted relationships with government leaders, tourism organizations, development agencies, hotel companies, institutional investors, and industry associations throughout Puerto Rico and the Caribbean. These relationships have enabled us to convene meaningful conversations, promote investment opportunities, and help connect regional projects with national and international sources of capital.

As Puerto Rico continues to experience renewed investment in hospitality, infrastructure, manufacturing, and mixed-use development, we remain committed to serving as a bridge between local opportunity and global capital.

That mission has guided AG&T since its founding and continues to define our role in helping shape the future of Puerto Rico and the Caribbean.

 

Sustainability at the heart of hotel design in the future

Green Hotels

Sustainability has been a buzzword within the design community, and hoteliers have been latching onto the idea of the past number of years

Sustainability has long been a buzzword within the design community, and hoteliers in particular have been latching onto the idea of the past number of years. Not only is it a response to an increased awareness of climate change and the impact we as humans, especially those working in one aspect of the construction industry, have on the planet, but it is also a response to client demand, with more and more guests desiring sustainable tourism as a requirement in their holidays. An annual competition run by hotel consultancy firm the John Hardy Group called Radical Innovation Award takes submissions for innovative hotel designs that reimagine the hospitality experience, and this year’s entries and winners point to a significant upswing in sustainable hospitality that could well be the future of the industry.

The award has singled out a number of visionary projects as finalists, but many of the entries proposed radical ideas that threw out the rulebook of hospitality design. A common theme was that of sustainability, both in an environmentally friendly sense, but also in a cultural sense, where local culture and art is celebrated and promoted. This also points to recent trends in hospitality where local experiences are being sought by guests wishing to engage more with the place and people they are visiting.

Green or garden hotels were a big feature of a number of entries. Canadian firm Arno Matis Architecture proposed a project entitled the “Vertical Micro-Climate Hotel”, whose concept is to make the outdoor areas of hotels located in the harsh climates of North America habitable all year round. One of the features of this hotel was the use of heliostat technology, a mirroring system which reflects sun back into certain parts of the building as required so as to make them habitable even in colder weather conditions. EoA’s submission involved suspending hotel facilities from a treetop by using a system of cables to hold rooms in tent-form above a trampoline-like platform, giving the hotel a very small footprint above the forest floor and re-orientating the guest’s field of vision to that from the tree canopy. A Dutch architecture student submitted a project that he had built in his mother’s back garden which connects guests to nature while allowing them to sleep in a sustainably built and naturally ventilated structure.

The culturally sustainable aspect came in the form of the currently-operational Play Design Hotel in Taiwan, which champions local artists and designers by installing their creations into hotel rooms and encouraging guest to interact with them. The idea came about after the developer noticed a lot of his artist friends were having to go abroad to showcase their designs, and he thought that it would be better to not only exhibit the work locally in hotels so that international guests could see them, but also to cultivate an environment of design engagement within the hotels themselves. “I want people to experience the culture of this country and played a lot with the idea of using the hotel as a portal for people who want to learn about Taiwanese design, a space that is furnished with all of these local designers’ work. So, their work is not only shown but so it’s experienced. Design isn’t something you only put in a museum or gallery. It should be used. It’s for your everyday use,” says hotelier Ting-Han Chen.

 

Article by Hospitality.net.